The Bank of England cut interest rates to 1.00% today, reflecting a further deterioration in the economic outlook.
January saw a steady stream of downbeat economic data released, including further job cuts across the economy and more insolvencies in the retail sector.
James Thomas, head of residential investment at Jones Lang LaSalle, commented: "The decision to cut base rates again will be welcomed by homeowners. The market remains extremely weak, transaction volumes are at record lows and house prices continue to fall. Initially, problems in the housing market stemmed from the credit crisis and the drying up in mortgage finance which followed. Now the market is being hit by recession in the economy as well via its impact on jobs, a key factor in determining homebuyer sentiment.
"Rising unemployment is stifling demand and we expect more house price falls in 2009. The main things to watch for in terms of stabilization in the market will be an unfreezing of the mortgage market and an improvement in the jobs market. Neither of these is likely any time soon. In the meantime, trading volumes will remain thin, though shrewd investors may be able to take advantage of current conditions and pick up bargains from distressed sellers."